Life’s a gas down on the farm

Chinchilla peanut grower Ronald Thompson admits he faced some scepticism from fellow farmers when he took up a new job showing that controversial coal seam gas extraction and agriculture could peacefully co-exist in Queensland.

His family farm near Roma was one of the first to be consulted when major oil and gas player
Origin Energy
opened its Spring Gully CSG plant in November 2005.

Six years on, he’s being paid by Origin to demonstrate that landowners and gas developers can live side by side.

Thompson is employed by Origin to run its sideline cattle and crops business on western Queensland farmland dotted with gas wells. He says having local farmers working with the giant gas producer has helped smooth relations between the two industries.

“There were some questions when you would meet locals down at the pub. But the general response has been at least they [the gas companies] have someone on there who knows what they are doing," he says.

Origin is one of a number of resource companies, including CSG developers
Santos
and
Dart Energy
and coal producers
New Hope
Corp and
Shenhua
, which have become significant investors in agricultural enterprises as they move to develop some of the nation’s largest resource projects.

Dart announced last month it was pondering an equity stake in a $65 million glasshouse project that would initially grow tomatoes, capsicums and cucumbers.

It follows similar moves across the industry to invest in ventures aimed at improving agricultural yields on properties acquired for coalmines and coal seam gas extraction.

The farming investments help to restore the industry’s tarnished reputation among rural landholders, who have lobbied to have tough restrictions imposed on coal and coal seam gas companies operating near strategic agricultural regions.

“We often get challenged over whether coal seam gas can co-exist with agriculture – and this is actually a really good example," says Dart Energy’s Australian chief executive officer,
Robbert de Weijer
.

“Not only can it co-exist, it can actually enhance food production."

Dart plans to construct a coal seam gas production pilot at Fullerton Cove, north of Newcastle, and has secured land access agreements with landowners.

Dutch group Dalsem Horticultural Projects is investigating a potential glasshouse project in the area, and the groups have established Maria’s Farm Veggies, a joint venture to pursue the glasshouse venture.

“The water that we are producing will be treated and used in the glasshouse and the carbon dioxide from the power plant will be used to make the plants grow fast," de Weijer says.

Dart has paid $5.2 million for a 20 per cent equity interest in the project, which will include a 16-hectare glasshouse, a propagation area of four kilometres and an 8 megawatt power plant.

Up to 10 of its coal seam gas wells will fuel the power plant over a decade.

Other energy companies involved in the controversial gas extraction process are also diversifying into new agricultural territory.

Major CSG developer Santos owns 33,000 hectares at Roma and Wallumbilla, both in Queensland, and has 900 head of cattle on one property.

“Traditional mining generally requires the outright purchase of land, displacing agriculture altogether," Santos chief executive
David Knox
said last month. “CSG is different. We can operate side by side with farmers – and we do."

Further south, in Queensland’s Darling Downs, coal producer
New Hope
Corp’s farming subsidiary, Acland Pastoral Co, has grazing on 3800 hectares of land, with another 1000 hectares under crop and 1800 hectares fallow.

“We’ve had the cattle for several years and we’re doing a trial to see how the cattle are gaining weight," ­he says.

The company sold 983 head of stock in 2011 and bought 2375 head, and posted an annual turnover of $3.6 million.

Anglo-Swiss miner Xstrata, the world’s largest exporter of thermal coal, has also emerged as an unlikely major player in Australia’s cattle industry.

Its wholly owned subsidiary, Colinta Holdings, manages a whopping 42,000 head of cattle across its zinc, copper and coal mines in the Northern Territory, Queensland and NSW.

Queensland-based Agforce president Brent Finlay forecasts continued movement of miners into agricultural production as companies buy up more land, buoyed by strong commodity prices and rampant Asian demand.

“I don’t think people understand how big this boom is and how big it’s going to get," he says.

“There is definitely potential for more expansion into agriculture by miners."

He welcomes miners which have become more involved in agriculture and says they are now an important part of the community and landscape.

“Given the size of their land tenures – they manage a fair bit of land – if that was left out of agricultural production that would have a fair flow-on effect."

Shenhua Watermark Coal, which owns close to 15,000 hectares of farm land outside Gunnedah in NSW, has employed a property manager and re-licensed land not used on long-term arrangements to allow six of the original landholders to continue farming. Shenhua’s project director, Joe Clayton, says all Shenhua-owned land is being used productively for agriculture.

“The farmers continue to farm sheep and cattle along with some cropping," he says. “We do not charge them a high lease and they keep their own profits.

“When we start mining, we’ll take back some land from a licence holder, mine it, rehabilitate it and then give the land back to the licensee."